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Closing Bell

News/Business. Maria Bartiromo, Bill Griffeth. A guide through the most important hour of the Wall Street trading day. New. (CC) (Stereo)

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01:00:00

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San Francisco, CA, USA

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Comcast Cable

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Virtual Ch. 58 (CNBC)

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mpeg2video

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ac3

PIXEL WIDTH
528

PIXEL HEIGHT
480

TOPIC FREQUENCY

Us 13, U.s. 7, S&p 7, Boehner 6, New York 5, Moody 's 4, Apple 4, Harry Reid 4, Facebook 4, John Boehner 4, Usaa 3, Pimco 3, Chris Christie 3, Washington 3, Schiff 3, Cole 2, Rodger 2, T. Rowe 2, Peter King 2, Rick Santelli 2,
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  CNBC    Closing Bell    News/Business. Maria Bartiromo, Bill Griffeth. A guide  
   through the most important hour of the Wall Street trading day....  

    January 2, 2013
    3:00 - 4:00pm EST  

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seven-year cost recovery program for race tracks, mandy, and finally and only because of time, $59 million in it for the production of cellulosiy biofuel, another benefit that has nothing to do with the cliff or tax es. benefit for aspir gus farmers. throw everything in at the last minute. that's why you need us, because we have people who don't read this stuff. we don't read it. >> meantime, a quick look at what the markets are up to. the nasdaq currently around a two and a half month high. the surge that we're sewing today in the nasdaq is the best gain in six month. also got the dow up by triple digits there, and the s&p is doing very nicely as well on this first trading day of the year. historically that is on its side. >> as we like to say here on "street signs." everything is fine. thanks for watching. >> send in your new word.
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happy new year. welcome to the "closing bell." i'm bill griffith here at the new york stock exchange. welcome aboard. >> hi, bill. i'm kelly evans in for bartiromo, and for investors it's a pretty happy start to the new year. >> i would say so. if you're bullish this market. >> right, if you're not short. >> exactly. >> and the markets, we're looking at the dow, off at session highs still adding 234 points. the nasdaq is the outperformer among major indexes today. up nearly 2.5%, and that's consistent with what we saw in 2012 and frankly since the market bottomed in 2009, the s&p 500 for its part adding 1.9%, 27 points, bill. >> bob pisani at the happiest place on earth today, disney world. he's at the new york stock exchange as well. welcome back. >> thank you very much, and we've got a big rally on hand here. four points i want to make. number one, this is a broad rally. 8-1 advancing stocks to declining stocks. number two, it's on heavy volume. number three, it's holding up. no sell into the rally going
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into the final hour of trading, and finally a number of important sectors and indices are at historic highs. not 52-week. take a look. when is the last time you saw the russell 2000 at historic high? been quite a number of years. that's it, and you can buy that. iwm is the etf symbol. s&p mid-cap, very important sector. historic high as well. that, too, you can buy in symbol mdi. let me move on and show you other big sectors. techs doing well. some moving to the upside. moves at hewlett-packard and dell, for example, nice moves in storage stocks as well. all of them are to the upside. meantime, seeing new highs. put up the home building charts. home builders and construction companies are all moving to the upside today. important thing here, owens corning had a new high. when was the last time you saw that. seeing masco at a new hope. s&p 500. bring back the retailers because we are seeing some laggards.
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finally, i want to make note that the hmos also lagging a little bit as well. still the threat of a 2% cut in medicare payments from the sequestration that's coming up in the next couple of months, but other than that it's pretty much all green. guys, back to you. >> all right, bob. thank you very much is this very strong start to the year a good omen for the rest of 2013? >> let's find out from today's "closing bell" expaining. michael pento from pento portfolio strategies, gene pirono, quincy crosby and our very own rick santelli. gene, let's start with you. you like financials and cyclicals here. i guess the broad message though is can we continue the strong gains that we've started the year on? >> i think so, kelly. i mean, this is not a one-day wonder. this is part of a trend that's been going on for some time. seen very good accumulation, this market especially on a non-block basis.
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the chart patterns are the best i've seen in my career. that's 38 years. the chart patterns depict a trend that can be sustainable and can deliver substantially higher levels. the fact that manufacturing is doing as well as it is i think bodies very positively, not just for the u.s. economy, but the economies globally so i think we'll in for surprises to the upside, especially as some of these issues that we've been facing in 2012 begin to ebb a bit. >> gene, you've not been doing this for 38 years, give me a break. doing this for locker than i have. >> it's hard to -- i think we're about the same time, bill, but it's been fun all along. happy new year. >> my dear friend michael pento. we finally found a stock market that you like. i hear you're buying right now. >> yeah, you know, i figured that the federal reserve will be unfettered in monetizing hundreds of billions of dollars in january and february, so i thought i'd go along for a ride here for a couple of months, but, look, listen. the reason i was like one of the only people on your network that said i wanted to go over the
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fiscal cliff, because people in washington, d.c. have no ability to cut spending. you know in november, the deficit was $172 billion. that was 25% higher than the november deficit of last year, and that's because -- not because revenue -- revenue was increased by 10 billion, but it was a $44 billion increase in spending. these people have no idea how to control spending. now they set us up for a fiscal canyon come march, and somebody better find barack obama in hawaii and ask him what does he mean he won't have a debate over the debt ceiling? is he going to raise that ceiling by executive decree? >> we'll find out. >> quincy, too, i want to bring you into this discussion here. what michael just highlighted was his big concern over deficit debt levels, that's fine, but we also know that going over the fiscal cliff, allowing some of these cuts to happen does mean cuts to the gdp. first off, do you like the cuts for tween, especially given some of the concerns that we've just
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raised about the end of the first quarter? >> yeah. we do, absolutely. coming into the -- the real fiscal cliff debate where it was off again, on again, it was amazing because the cyclical stocks were holding up, the russell holding up. all predicated on an outlook that was -- that had growth continuing. also today we're seeing the yield on the ten-year moving higher. we'd like to see it cross 190. it would lend confirmation to the fact that we are -- we are growing, and you're seeing all of those cyclical names and that's been healthy for the overall trend in the market. in addition, the credit backdrop is attractive. >> hold on. i'm sorry, i don't want to interrupt, but where do you get that we are growing? is that why yields are rising because we're growing or because the fact that the fed is montidesing 85 billion a month and there's no reduction in spending and we haven't placated the bond vigilantes at all and
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our international creditors will not keep fund iing interest rat. it has nothing to do with growth. >> it hasn't happened yet. it hasn't happened yet, and in the markets, as you should know it, doesn't matter until it matters, and the fact is that going into this the ten-year yield was very steady, but it has starting to move. >> because of growth? so it's up 30 basis points because of growth? >> there is going to be a little bit more growth. that's it. a little bit more growth. >> let bring in the always calm, collected rick santelli. you can tell us why yields are going up as much as they are. i mean, this is very much a risk-on day today, but do you think yields go much higher? >> i personally don't 2013 is going to be the year for the big enchilada pushing rates dramatically higher. i do think they will have some elastici elasticity. up seven basis points since the last time we traded is still
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under where we closed 2011 and haven't seen 2% in a long time. believe me, gang, if we're looking for some kind of a solution to our problems on entitlements and overspending that isn't going to show us a contraction in gdp, then you really must believe in uniconscious. because all you have to do is look at the transfer payment effects on the gdp and understand those are where we need to make the cuts. i was watching one of those comedy shows, that kind of thinks they are a news show, talking about during the clinton years we had no debt. just the notion of a budget surplus versus a national debt gets lost on many. i don't know that we're going to have a chance until the leadership really tries to be honest with the public. >> we didn't have a surplus if you count the intragovernmental debt of social security and medicare. we had no surplus during those clinton years, you know that. >> that's correct. >> one thing that's clear it won't help our deficit and debt levels going forward if the economy goes into recession so while you're right there's not a solution here that pleases
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everyone, part of the problem is if this solution includes significant near-term spending cuts, it only makes the long-term problem worse. >> right. so if you don't want to have any contraction at all, then we're going to end up just like some in southern europe. we'll have to wait until after the event occurs, and then you're going to have the press going oh, my god, how did this happen? just like today, i can't believe how many channels are talking about where was the entitlements? those fiscal conservatives failed? where was the media asking for them? >> yes. well, we'll wait two months and then we'll see what they come up with alternate time. thank you, folks. michael, see you later. rick, we'll see you later as well. happy new year, quincy. >> happy new year. >> breaking news right now from moody's. mary thompson has the details. >> hey there, bill, a credit rating agency, still maining aaa rating on u.s. debt saying the fiscal cliff deal is a positive because it does avert a recession, and it does anticipate further u.s. fiscal action following this deal. however, moody's notes that a lack of deficit reduction
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measures could affect the u.s. rating negatively meaning if there aren't efforts addressed by congress to address the long-term deficit it could affect the aaa rating. outlook by them is negative in large part because of concerns about the long-term deficit problems. guys, back to you. >> thank you, mary. so they are saying, we've got one piece of the puzzle done, the taxation part. now they have to worry about the spending part, and if they don't do enough we could be seeing a downgrade. >> the question is does it matter? at what point does it matter? >> good point and they often tell us what we know. in this case it's clear we have this issue we have to confront. >> we're heading towards the close on what's been a very strong first trading day of the year. right now with 50 minutes left, the dow is up 280 points. >> bill gross of pimco says this rally will last. >> and then facebook is on a roll today, up about 5%.
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2013 the year it gets back to its ipo price of $38? some facebook facts coming up. >> then, f-boks outside the oval office. up next, new details on how we got to the tax deal that averted the fiscal cliff, and if the well is poisoned for future debt and deficit negotiations. >> that and much more coming up on the most important hour of the trading day. stay with us. power consumption in china, impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u.s.? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing.
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welcome back. just joining us. had a rally today. stocks sharply higher across the board with about 45 minutes left in the trading session. the dow is up 237 points. what did we say, kelly, the high of the day was a 277-point gain. >> right. >> nasdaq even stronger. technology has been the leader to the upside today, and the s&p is up 27 points at 1453. >> that's right. well, the market likes washington's tax deal, but does pimco's bill gross? after all, it does little to nothing to address debt and deficit levels, and that could eventually impact bonds in a big way. bill joins us now from pimco headquarters in california, and, bill, your reaction? >> welcome back, sir. >> thank you very much. thanks for having me. well, kelly, you know, i think that this rally is really a rally emanating from japan and actually from the fed in terms
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of its new qe policies. to suggest that it's a fiscal cliff avoid type of rally i think is a misconception because, you know, basically the central banks are in the process of writing lots of checks, hundred of billions of dollars worth of checks. the fed just today is instituting a new program and so, you know, what we see is central bank check writing as opposed to fiscal cliff avoidance. actually the -- the economy and the investment markets are being affected negatively by this package. >> well, in one of my takes, bill, is that we're underestimating the importance of the capital gains rate and the dividend rate which will now at the top end be only 20%, not the 40% that had been feared. that has to be a big positive for investors out there, doesn't it? >> well, i think it does. you know, to be fair, the market never really anticipated that it would go all the way up, and the rate is actually 23.5% because of, you know, some additional overlays on top of it. >> right. >> so capital gains taxes are
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going from 15 to 23.5, and that's not a positive. but let's not be grinchy about all of this. we like higher stock prices and higher bond prices as well, but ultimately you come to a point really where, you know, the government in terms of this current package, you know, hasn't addressed spending but has addressed taxation which, you know, experts about a 1.5%, what we call, economists call a fiscal drag on the economy. that means instead of, you know, perhaps 3% growth for 2013 we're going to see 1.5%, and that's a pretty low rate of growth for corporate profits to do well. >> bill, we also are now just two months away to what is shaping up to be an epic fight over the debt ceiling. how concerned are you about that, and how do you expect that to play out? >> very concerned. there's really three roadblocks here, kelly, you know. there's the continuing budget resolution which means they have to come up with a budget in the next few months and look
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forward. there's the sequestration that has to be addressed in the next several months, and then there's the debt ceiling. one, two, three, the republicans are going to hammer at the administration in terms of what they want in terms of lower spending, as opposed to higher taxes, and so, you know, to my way of thinking, you know, that proves the dysfunctionality really of government on a continuing basis. one of the problems that we've seen here in the past month, in the past several years has been this dysfunctionality which caused moody's and standard & poor's to, you know, begin to lower their quality ratings, and so the government is not in sound hands or in common sensical hands going forward. i think investors should be concerned. >> bill, but i wonder if we're getting confused here, confusing the issue to some extent including the ratings firms, because they are downgrading on the inability to really come reach a deal, but they are also saying it's because we can't reach a dole that lowers debt levels or at least stabilizes them long term. no one seems to be focusing on the real issue that either the
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fiscal cliff is about or that is getting lost in all of this which is growth. if we don't have growth in place, all of the long-term projections look significantly weaker. >> yeah. i think that's the magic elixir, in the u.s. as well as in the peripherals in euroland. you need growth to basically bail yourself out of a situation, and i think in terms of the rating services, what is really critical is not what the ratings services say, but it's what investors do. the whole world has been watching here. someone should ask where are the bond market vigilantes, where are the stock market and currency valujetigilantes? what we're continuing to witness in 2013 is a dysfunctional government dealing with a dysfunctional sglugt where do you think those bond vigilantes went? they were so influential in the 1980s, and here we are sitting and talking to the guy that is the most influential guy arguably in the whole bond market. where are your peers out there to have some say in this whole
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proses? >> let's be fair about this. the vigilantes have been superceded by the fed. i mean, the fed buys, believe it or not, 80% of everything that the treasury issues now. they are buying $1 trillion worth of bonds and mortgages a year. $85 billion a month and so, you know, what can the vigilantes do, you know, relative to the fed? >> right. >> there's hardly any bonds for the vigilantes to buy, so not to denigrate our responsibility in all this because i think what a vigilante should do in the bond market is sell long-term debt as opposed to intermediate term bent because it's the next long testimony debt affected by the higher check writing. >> we all know we have a dysfunctional congress and you're unifying very few people who were satisfied with the tax portion of the deal, whether you're a democrat or republican, especially on both ends of the spectrum so in your view what's
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a dysfunctional congress going able to do about spending when we come to the debt ceiling discussion in a couple months? >> they have to attack entitlements, let's be fair about this. entitlements going forward are about 45% of the current budget and increasingly, as the boomers get older, bill, you know, it will take up a larger and larger portion of our budget, and so entitlements have to be attacked. that is medicare. that is medicare. that is social security and, you know, to the extent that there's some adjustments coming in terms of the inflation base measurement going forward in terms of social security, fine. to the extent that they can help health care in terms of reducing its expenses, fine. but we have a $64 trillion entitlement that isn't being addressed and at some point that aaa rating has to be at risk despite what moody's just said. >> bill gross, thank you so much for your time. >> thank you.
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>> happy new year. >> so, we're heading towards the close. the rally hangs on here. sort of plateaued after that early morning rally this morning. the dow is up 241 points right now. >> jpmorgan is the latest firm to turn bullish on facebook, and that stock is up over 30% in the last two months alone. it is still $10 below the ipo price though, so is now the time to buy? that trade is next? >> also ahead, apple. you know, people are still getting to know their iphone 5 from christmas, right? now we're hearing that apple is already testing its next version. iphone, and somebody here says the rollout could make or break the stock for 2013. we'll look at that coming up.
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well, stocks are surging today, and apple is a big factor driving gains at least in the nasdaq. seema modi has more on this story. hi, seema. >> hi there, kelly. apple kicking off the year on a strong note. there's two main reasons there. first, dividend stocks in general getting a bid today after receiving more clarity around the tax rate and second a tech bloc blog that apple is working on the iphone 6 as well as a new operating system for the iphone and ipad. that report providing a nice report to some of its speculative suppliers including chip-makers broadcom and qualcomm. social media also getting liked by wall street. facebook leading the rally there. jpmorgan writing that facebook's ad revenue will aksccelerate through the first quarter 2013. shares of facebook up 60% from
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its september 2012 low so we're seeing a sizable comeback. bill, back to you. >> let's stay with facebook as we start talking numbers for the new year. on the technical side jc o'hara and on the fundamental side john stevenson with first asset management. happy new year. thanks for joining us. j.c., what do you think, time to look at facebook as a buy here? >> you had to be very, very patient with facebook. we stayed away at ipo price and didn't try to call a bottom, but now after letting facebook, you know, trace out a chart pattern, we like the chart pattern and are looking to get in right here. facebook actually traced out a cup and handle formation and that's one of my most favorite bullish patterns. over the summer months, july, september and october, formed the cup part of it. last two months the stock consolidated forming the handle part and now we're looking to spring higher and looking to test the ipo price of 38 if this chart pattern comes to fruition.
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>> john, you ready to sip from this cup and handle? >> not at all. first of all, hasn't even broken the resistance line on the cup and handle but let's assume that it were to. this thing is so overvalued. trading at 44 times, so you have to believe in you're pike it today that this thing continues to be the technology of choice, that advertising revenue accelerates and that they get more advertising revenue from the mobile side of the business which is where the whole business is going, and it's just hard to see that this is a company that's very arrogant, pissed off most of its users with the instagram snafu and hard to see how this goes higher. >> i'll say this, if you want to use me as a sentiment indicator. yesterday i was sitting on my couch watching college bowl games and clicked on one of the facebook mobile ads. this is hard to value from a fundamental point of view and golden cross, occurring today, where the 50-day moving average is moving above the 150-day
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moving average which is showing trends and momentum are turning positive for the stock as well. and i think it's a better trade for traders as opposed to a fundamental analysis. >> john, what would make you bullish? what would make you bullish on facebook? >> well, reasonable earnings would make me bullish or a proven model. i think the model is unproven. i think the valuation is way too high. can you buy apple for 10, 11 times and google for 10, 11 times and here you've got 45 times. looking at an incredible growth rate of these earnings to value at this level, and i think that's the big problem. you're also looking at jumping in when the thing is up 60%. i think that's just a hard sell for me. >> last word to you, j.c. >> well, i like the chart pattern. i've seen this chart pattern occur many times. >> all right. >> and bill o'neill's book "how to make money in stocks" in 1988 made this chart pattern famous and his favorite chart pattern and one of my favorite bullish chart pat sglerns thanks, guys. happy new year. >> kell? >> all right, bill. keeping an eye on markets, the dow is now climbing 240 points as we get closer to the close.
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the nasdaq leading the way at 2.6% today and the s&p 500 better than 2%. house speaker john boehner reportedly cursing out senate majority leader harry reid right outside the oval office. representatives from both sides of the aisle will join us next to explain how lawmakers can possibly reach a deal on the debt ceiling in this kind of poisonous environment. plus, new jersey governor chris christie is furious. >> there's only one group to blame for the continued suffering of these innocent victims, the howth house majority and their speaker, john boehner. >> we'll get into the politics behind that bill when we get back. >> we'll get into the poli behind that bill when we get back. g kong. tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan. tdd#: 1-800-345-2550 with the new global account from schwab,
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. welcome back, we have some breaking news on aid for sandy victims. eamon javers has details on that. eamon? >> hi, bill, well, a group of lawmakers from new york and new jersey just coming before cameras here within the past couple of minutes to announce that speaker boehner has relented on the sandy aid funding, at least in part agreeing to a deal. according to new york congressman pete king. that would provide $9 billion in
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aid as early as this friday, and then they would agree on an additional up to 51 billion later on during the course of the month of january. obviously this has been a very contentious fight. we saw a very angry new jersey governor chris christie in the 2:00 hour holding a news conference, denouncing republicans in the house of representatives, but these republicans in the house today saying that they now have a deal and they seem fairly pleased. peter king saying he would in fact vote for boehner for speaker, despite some very heated criticism of his own of speaker boehner earlier today. guys, it looks like this hurricane sandy relief fight is over, at least for now. >> wait. how does this work? i mean, he's promising $9 billion by friday, but does that mean they are going to vote on something today or tomorrow? >> it looks like they will do it as early as friday, and they will do it in the new congress. i mean, they have a new congress coming in towards the tail end. >> noon tomorrow? >> right. >> so it will have to be an entirely different congress that takes this up. presumably boehner will still be speaker. got to win a speakership election between now and then.
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no indication that he would lose that so he has the authority to make these promises of what the next congress will do because he'll be the guys in charming. he's trying to mollify the new york and new jersey congressmen who have been extremely heated. i mean this, has been very bitter, intraparty warfare over this issue over the last couple of hours. >> not like they will dribble it out as they go on. >> this at least gets them something up front, a down payment on what they are looking for, and from the tone of this press conference which is still going on right now, so we haven't heard all of it, it seems like some of these members are happy with the deal that they are being offered now. >> very good. eamon, thanks very much. >> just fascinating, bill, because the bigger the size of the sandy relief package, the sooner we hit the debt ceiling so these issues aren't related, and on that note house speaker cursing out the senate majority leader outside the oval office, part of the fiscal cliff follies and now the same group has to work together on delicate issues, yes, like the debt
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ceiling. our chief white house correspondent john harwood has more on the increasing animosity down in the nation's capital. >> you heard about it from i'mon. the same animosity that takes place between democrats and republicans routinely and has escalated at moments of high tension like this over the fiscal cliff also is taking place within the republican party. chris christie coming out so strong against the speaker and house majority. peter king and those other congressmen that eamon referred to beingt, and this is part of the republican party's effort to come to the grips of the influence of tea party factions which have been very -- have made it difficult for the normal give and take of politics that takes place on the hill to work. speaker boehner was upset at harry reid because harry reid made some very intemperate and over the top kind of ridiculous remarks about the speaker as a
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dictatorship which, of course, is silly when you consider the speaker couldn't even get his own plan "b" cleared on the floor of the house of representatives because of republican opposition, but that's the kind of tension that arises when you've got polarized parties and one party especially in the grip of a faction that is very conservative, doesn't go by the normal political rules of what compromise is about and what the government ought to spend money for. >> i mean, the story, is harry read, as we all know, referred to john boehner as a dictator on the floor that day, and we're hearing that john boehner dropped an f-bomb on harry reid outside the oval office. >> that's not routine. >> that's not routine. >> oh, it's -- it's more routine than you think. we all remember when dick cheney, the vice president, ran into pat leahy, the veteran senator who is now the senator -- senate pro tempor, the dean of the senate from vermont, ran into him on the
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hill and said precisely the same thing. i think it's a three-word thing that begins with go and ends with yourself. >> we can use our imaginations. we can do the math. >> thanks, john. >> you bet. see you later. called me old-fashioned but i don't think it's appropriate in the people's house. >> let's hope harwood can rise above the d.c. rhetoric. >> of course he can, and as we head towards a debt ceiling showdown how do we reach a deal in this obvious hostile environment? >> let's get perspective from republican tom cole along with democratic congressman adam schiff. congressman cole, first to you. how can we expect a deal amid all this partisan bickering? >> well, i think if the president will lead, we'll put forward real spending cuts, real entitlement reform, we'll be able to handle this. so far he hasn't done that. talks a lot about a balanced approach. he got revenue last night. frankly i worked on that, and helped my friends achieve that, but now it's time for him to
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live up his end of the bargain and put serious spending cuts and serious entitlement remember forms on a table. if he does, he'll find willing partners in the republican conference. >> congressman schiff, that's the big question for the next few months. the cbo has already scored the tax deal saying it adds $4 trillion to the deficit over the next ten years. understanding that speaker boehner wants a dollar for dollar spending cut for each dollar of revenue reached, that means you need to find $4 trillion in spending cuts in the next couple of months. that has to mean cuts in entitlements, doesn't it? >> well, i don't think we're talking about $4 trillion in cuts. it's going to have to be a balanced program, as the president put forward where we have going forward additional spending cuts but additional revenue as well, and that means that everything is going to be on the table, and we cannot afford to go through another bitter fight this time again over the debt ceiling. that was a disaster a year ago,
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and we just can't allow the gop to put a gun to the head of the economy again. >> wait a minute. are you talking about -- are you talking about more taxes -- you're talking about more tax increases in the next few months, continued increase in revenue, where does that come from? >> well, it's going to have to come from increased taxes on high-wage earners or elimination of certain deductions. >>y just did that last night. >> did some that have last night. look at what we've done so far. we agreed to a trillion in cuts and agreed to 600 billion in new revenue so we're about 2-1 cuts to revenue. as we go forward the president said we'll have to match new revenue with new cuts, and that's going to be part of the debate and discussion going forward on the continuing resolution, on the debt limit as well as on the sequester, but, again, this is something that reasonable minds ought to be able to come to agreement on. you won't find tom and i dropping f-bombs on each other. we work together very well. we need rest of our colleagues
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to work together very well. >> congressman schiff, that may be so, but what about raising taxes for those below the wealthy, especially to pay for some of the programs you'd like to keep funding going forward? >> well, in fact, we've done that by allowing the payroll tax to be eliminated. >> going beyond that though, when we talk about income tax rates, could those making under $400,000, really expect their taxes won't go up? >> if i had my way frankly we would have used the $250,000 level and that may again be part of the discussion. we also may look at limiting deductions of high-wage earners as a way to bring in additional revenue, so all of those things are going to be part of the conversation going forward, and frankly it's very important for the president in his press conference the other day to lay down a america and establish that we're not simple police going to be talking about cuts going forward. this -- yes, we have avoided the first fiscal cliff, but we're going to have to go forward from this point on in a balanced way as well.
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>> congressman cole, haven't forgotten about you, sir. from what you're hearing from congressman schiff, how far apart are you guys as we head towards the debt ceiling cries coming up in a few months? >> we're a long way apart quite frankly. we just did revenue, and the idea that we would come back in the next 90 days, when both the debt ceiling, the sequester and the continuing resolution all come to a head, i just think it's not politically feasible and not wise. nobody believes that the president is serious about actually reducing spending. he's got an opportunity here to lead. >> well, let me ask you about what songman schiff's statement that he'd like to seat tax increase exposure reduced to those making $250,000 or more. do you think that could pass the house at this point? >> absolutely not. no way. look, we just finished the revenue piece, and this was a negotiated settlement between all the parties. the idea you're going to reopen the negotiations is just ludicrous. with all due respect, we do work together well. i admire adam.
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he's a great member of the house, but, look, the trillion dollars in cuts he's talking about were from the last debt ceiling deal. that's the only way you got them. you can't count them twice. we got them. it's done. it's now time to deal with more spending cuts and entitlement reform. there's simply no other way to get there. this is not a revenue issue. i mean, we've just increased revenue, again, as adam said, both with the payroll tax and on high-income earners. it's time for the government to actually go on a diet, and it's time for us to make some really tough entitlement decisions that's going to take presidential leadership. >> all right, gentlemen. thank you both. i think we're in for a rough few months beforehand, but happy new year. thank you poet for joining us today. >> thank you. >> i don't know. >> i think you're right, bill. not just here. the world's attention is focused on this issue. thought we might wake up jan 1 and have some clarity. >> it's in two pieces, taxes last night and spending cuts coming, and that's going to be the tough one right there.
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in the meantime though, the market is moving higher. we're close to session highs. we're up 277 at the high of the day, but right now the dow is up 261 points. >> be careful chase after those dividend stocks though. even after a favorable deal on tax rates. our next guest says there's still a lot of risk there. >> also, although congress did reach that tax deal to avoid the fiscal cliff, does that give investors and business leaders enough certainty to move forward with confidence and use some of that cash signature on the sidelines? billionaire investor wilbur ross joins us. he'll explain how that's affecting his outlook coming up later on the "closing bell." over the south pacific in 1943. i got mine in iraq, 2003. usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection, and because usaa's commitment to serve the military, veterans and their families is without equal. begin your legacy, get an auto insurance quote.
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usaa. we know what it means to serve. we asked total strangers to watch it for us. thank you so much. i appreciate it. i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money? if your bank takes more money than a stranger, you need an ally. ally bank. your money needs an ally.
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investors who buy dividend-paying stocks will now be paying a 20% tax rate on those dividends instead of the 15% thanks to the deal congress reached last night. of course, you also need to add about 4% more if you make above $250,000 thanks to the health care law. still that's viewed as a favorable outcome for those dividend dash paying stocks because the fear was -- >> 40%. >> it was going to go to 40%. eff cox says t note our own dividend-paying stocks may pose some of dangers investors are missing regardless of that friendly tax rate. even as ryan lorenza, our u.s.
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extis strategy for tds thinks dividend stocks will pay off. jeff, why are you concerned? >> let me talk about a couple of issues. the one you is guys talked about before. we are in the early innings of this whole fiscal cliff mess and the sequestration and what not. it's going to create a lot of volatility in the market. dividend stocks underperformed last year only with a 5% return. i think they will underperform this year. second point is that we saw in december a lot of special dividend issues happening. i think that was sort of a pull forward kind of demand, and they didn't even do that well when the special dividends were happening. finally i just kind of think when you look at the growth versus value, that if these boring old dividend stocks won't be there, the big market trend this year is going to be buying the dips and selling the rallies amid all the volatility that we're going to see. once europe comes back, as the mess continues in washington. i just think that the dividend stocks are not going to really
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thrive in this type of environment. >> so you think they will go for growth instead. what about you, ryan? what's the reason to buy dividend paying stocks if markets take off? usually they will take off if the market is underperforming? >> yeah, i agree with jeff's view that the next couple of month is going to be very volatile for the equity markets, particularly as we work through this debt limit increase. february, march, but our view how to position is completely different. we think there is going to be more volatility. therefore you want less beta and high quality dividend-paying stocks to get you through this rougher period. the big bearish call for dividend-paying stocks is valuation. we agree there are some areas in the market that are fully valued, u.s. telecom, tobacco stocks, but we still see some value in dividend-paying stocks and still think they need tonight cornerstone of your portfolio. >> what about utilities, the big laggard in the last couple of quarters. do they catch up here? >> they with the big outperformers in '11 and
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underperformers in '12. we're a market wait on utilities. we're waiting and would like to see a little bit more of a pullback and even market weight on utilities. we're looking for other areas. the strange area that we're looking for is, for example, information technology. well, that's a stat that we're overwat and we think there's very attractive companies with growth and dividends from the info tech sector. >> jeff, where else would you go to find income right now? >> i still like the financials. one of the big things that i think for tween is we saw a rotation as far as sectors go somewhat in 2012 compared to 2011. i don't think we're going to see that. i think a lot of what worked in 2012 will continue to work in 2013. i like the financial. i'm still not craze bet energy stocks, and health care, i think they are going to have some problems, too, so i would just kind of stick with what worked, and, again, i just think that the dividend stocks are a little too defensive here in a market that's going to be very
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unpredictable. i -- it's just not seeming to me that it should be really like that corner stephen your portfolio. >> we got it. mr. risk taker himself, jeff cox. >> we'll leave it there. check in about 12 months time and see how those predibses stack up. >> there are just how long here, 12 minutes. am i doing my math right before the closing bell. dow up better than 2%. >> and is the talk of the trading floor here, is this rally a one-day wonder or the start of something big? find out what the stock market historically does when it starts the year off with this kind of a triple-digit rally. >> yeah, and how far are republicans willing to go in the upcoming debt ceiling fight to exact real spending cuts. fiscal hawk representative david schweiker weighs in right when we get back. 315 horsepower. what's that in reindeer-power? [ laughs ]
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so what to make of this rally. we bring our eye on floor the to the anchor set, bob pinsy. >> happy new year. >> decent rally. >> yeah. i'll tell you what's interesting. there's a lot of debate about the volume because volume is heavy today. there's a general perception on the first trading day of the year that a lot of the volume is retail volume. that's good. if that's true, because you've got heavy some kind of
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investment here from the retail side of the business. now, last week we saw inflows into stock mutual funds for the first time in a while. we have been waiting for this story for 1 million years so the question is is the retail investor going to start getting invested in stocks a little bit, and a lot of that depends on whether they believe the bond market rally is over. >> is that a good sign or not. isn't that with all due respect the dumb money that smart guys like to talk about as a classic sign to get out? >> i don't think so necessarily. i've never particularly followed that. a broader and more important question, are stocks fairly valued, or are they undervalued or overvalued? >> right now most people will tell you they are probably valued. stocks are fairly valued. a lot of room to argue that the multiples should go up so we're 13.5 times forward earnings. a lot of people are arguing we should be trading at 15 times forward earnings because europe is cleaning up. if we can do anything in the next couple of month, a lot depends on that mini fiscal cliff you can face up again.
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now you can argue we should put a 15-year multiple and then all of a sudden you're in 1400, 1500. >> you could argue there would have been higher multiples if there weren't a lot of multiples. >> this is the fifth year in a row that the first day of trading has been up. i don't think that's ever happened. i'm calling around, but i don't remember when five years in a row, the first day of trading, all up more than 1%. >> and we're at session highs. bob pisani. thank you, sir. >> coming up, just after this, we're back with the closing countdown. >> a quick recap of the day here. also after the day, apple reportedly testing another new iphone and could be much different than the current version. how big of a deal is that for apple stock 2013 and why it could mean everything. that's coming up. i'm only in my 60's...
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[ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade. coming up on the three-minute mark. i think we'll call this the ellie kefns rally. >> i think we should call it the ben rally here. >> i'm not going to take any credit for this. >> pulled you in. >> first time you've been in from london in a while and you get a rally, coincidence. i think not. let me show you what's happening as we go out. coming out with a gain of 286 points on the dow right now.
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that's the high for the session, but even stronger, as kelly was pointing out earlier, the technology stocks are powering the nasdaq higher so the dow is up 2.18%. the nasdaq is up almost 3% at this point. what about the fear indicator vix has had its biggest two-day decline now in a few years. it's down another 18% today at 1477. what's powering us higher here? among the s&p sectors, technology. look at, that kelly, up 3% almost on that. the financials, the telecoms. >> look at telecoms up 3%, and we're just seeing the s&p at session highs, 1458. those are the levels to watch. so we're at highs much earlier in the day at 10:00 and now as we enter the final minute of trade, back testing those levels. >> look at this. you know. all of the sectors are higher, and appreciably higher so, you know, this is very much a risk-on day, but even the defensive issues have been trading higher as well today. >> absolutely. not to rain on anybody's parade, i'm very concerned.
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i was talking to arthur cashin, the chairman of the fof of which i'm a proud member. i'm concerned about the trend. that's not a very good indicator for the health of the market, at least for tomorrow. >> the direction of what? >> right now the -- what we're seeing is a buy on the bell mentality because traders anticipated a high in the morning and softening throughout the day. didn't really get that so there's a buy to cover. >> wondering if we would get a 300-point gain on the dow. up 287 right now. talked in the past about how it is the smart money that trades in the last hour of the day, but we're powering higher here. >> we are, and they are posting balances of over $1 billion of stock to buy going the way the new york stock exchange disseminates information so you're seeing part of that into that buy to cover. shortened this market at 1130 when europe closed, did wind up to be a good trade. >> let's be clear. >> you've been bullish. >> your bias has been to the upside the last fewee